HL Deb 02 March 1967 vol 280 cc1169-71

3.6 p.m.

LORD GRANTCHESTER

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government

  1. (i) why the increase of £660 million in their planned expenditure for 1967 over that of the previous year, which is an increase of 8.5 per cent., is stated to be an increase of only 5 per cent. at constant prices;
  2. (ii) what is meant by "constant prices"
  3. (iii) whether the 3½ per cent. difference between 8.5 per cent. and 5 per cent. is a measure of the ineffectiveness of the Government's prices and incomes policies, or of the degree to which Her Majesty's Government have been blown off course.]

LORD SHEPHERD

My Lords, the increase of £660 million (after allowing for classification changes) in the Supply Estimates for 1967–68 as compared with 1966–67, represents a rise of 8.5 per cent. in money terms. Of this increase of £660 million, some £261 million is directly attributable to identifiable changes in costs. The remainder, £399 million, or 5 per cent., represents the extent to which the total of the Estimates has risen for reasons other than changes in costs. It is in this sense that it has been described as an increase at constant prices. The significance of this figure is that it provides a broad measure of the extent to which the 1967–68 Estimates represent, an additional claim on the nation's resources of manpower, materials and equipment.

The answer to the last part of the Question is, "No". The greater part of the £261 million rise in costs is attributable to developments before the standstill in prices and incomes. Perhaps this is best illustrated by the comparable rise in the previous year of some £378 million.

LORD GRANTCHESTER

My Lords, in thanking the Minister for his reply, may I ask whether the ordinary citizen may follow the example of Her Majesty's Government and make appropriate adjustments, for instance, in the amount of his income or pension, in returns to the Inland Revenue?

LORD SHEPHERD

My Lords, I am not quite sure whether I followed the noble Lord's question, but if I did I would say that what we are seeking to do, after a good deal of pruning, is to provide some of the services which the State obviously requires.

LORD BYERS

My Lords, can the Minister tell us whether "constant price" means a price which is constantly going, up?

LORD SHEPHERD

My Lords, the noble Lord should read what I have said, and then perhaps he might understand.

LORD CARRINGTON

My Lords, may I ask the noble Lord a question?—but before I do so perhaps your Lordships would allow me to say, on behalf of all of us in the House, how very glad we are to see the noble Lord, Lord Stonham, back, looking, if I may say so, very well.

NOBLE LORDS: Hear, hear!

LORD CARRINGTON

Would the noble Lord, Lord Shepherd, agree that increased social expenditure should be financed out of the growing expansion of British industry and that we should not cash our cheques until the money is in the bank?

LORD SHEPHERD

My Lords, there is a great deal of wisdom in what the noble Lord has said. What the Government have sought to do is within what the Chancellor of the Exchequer explained to the other place in a Statement which I repeated in your Lordships' House: to contain the increase in public expenditure at constant prices, taking one year with another, at some 4¼ per cent. In 1966–67 we had an increase of 1.8 per cent. at constant prices, and in 1967–68 we propose an increase of 5 per cent., which shows an average of 3.4 per cent. over the two years. I should have thought we had achieved the objective which the Chancellor set out in 1965.

LORD HARLECH

My Lords, is it not a fact that when the suggestion was made that this kind of increase might take place each year in public expenditure, it was against the background of an increase in the gross national product of this country of about 4 per cent.? Now that the norm is zero, is everybody else to stick to the norm of zero except the Government?

LORD SHEPHERD

My Lords, we have, as the noble Lord says, a norm of zero for this particular year, but I can assure him that it will not continue.

LORD CARRINGTON

My Lords, is the noble Lord aware that my first supplementary question was a direct quotation from the Chancellor of the Exchequer and that those were the very words he used? Where is this increase in expansion in British industry?

LORD SHEPHERD

My Lords, I agreed with what the noble Lord said, because I recognised what he quoted. What I said to his noble friend was that at the present moment, for various reasons, which the noble Lord knows as well as I do, we have had to hold back the increase in production, but we do not anticipate that this situation will continue much longer.

LORD INGLEWOOD

My Lords, since this increased expenditure is to be financed largely from taxation, and since a very large part of taxation is levied on company profits, can the noble Lord tell us whether the trend of company profits at the present time is up or down?

LORD SHEPHERD

My Lords, I do not think I can anticipate what my right honourable friend will be saying in some weeks' time.

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